Mobile price wars flaring up everywhere but America
In the second quarter this year, the U.S. mobile market was still an oasis of calm, But across the globe, mobile carriers have started struggling with a cluster of price wars breaking out from Europe to Africa and Asia.
This week, the French giant Bouguyes warned about its 2012 earnings coming in 41% below the 2011 level. The big problem in France is Free Mobile, a new service offering a €20 monthly plan with no long-term contract. Free Mobile has also dented the fortunes of Vivendi and France Telecom, both of which have announced substantial layoffs.
In New Zealand, Vodafone and 2degrees are locked in a battle of new $19 monthly plans — and a discount brand called Skinny has now launched a daring $4 weekly plan featuring 60 minutes of voice calls and 60Mb of mobile data.
In South Africa, a grim discounting battle grinds on. The latest shock came last week when MTN slashed its mobile data pricing from $35 to $11 for 1GB. The price of the 500 MB package plunged from $19 to $6.
All of these examples have something in common: they feature operators pushing the monthly cost of a mobile voice, texting and data package below $30 USD. In southern Europe, the move is mandated by a deteriorating consumer spending climate. In places like New Zealand and South Africa, the competition seems to stem from a large number of mobile operators with aggressive subscriber growth plans.
The U.S. market lacks either of these two triggers. As a result, the recent new price cuts by MetroPCS (PCS) and T-Mobile seem positively minuscule in comparison. Both Sprint (S) and T-Mobile clearly believe they don’t yet have to engage in scorched earth strategy. AT&T (T) and Verizon (VZ) are so complacent they are actually hiking prices — at least for consumers not opting for family plans.
It will be interesting to see how long the U.S. market can remain a haven of high-priced calm. Fat and happy dominant carriers would seem to be precisely the kind of target for the disruption that is convulsing France right now.
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